4.4 Employment Data & The NFP Phenomenon

The second mandate of a Central Bank (alongside controlling inflation) is maximizing employment. Therefore, employment data is one of the most heavily scrutinized macroeconomic indicators in the world.

A country's economic health is directly tied to its citizens' ability to earn wages and spend money. Strong employment numbers indicate a growing economy, which leads to higher consumer spending, which in turn can lead to inflation, which forces the Central Bank to raise interest rates. As we learned in the previous lessons, higher interest rates equal currency appreciation.

In the Forex market, no single economic report causes more extreme volatility than the United States **Non-Farm Payrolls (NFP)** report. It is released on the first Friday of every month at 8:30 AM Eastern Time.

The NFP report measures the change in the number of employed people in the US during the previous month, excluding the farming industry. It is released alongside the Unemployment Rate and the Average Hourly Earnings data.

When NFP is released, you will often see currency pairs involving the USD (like EUR/USD or GBP/USD) and commodities like Gold (XAU/USD) spike hundreds of pips in a matter of seconds. Institutional algorithms are programmed to execute massive block orders the millisecond the data deviates from the forecasted number.

As a professional retail trader, it is highly recommended to **not** trade during the exact minute of the NFP release. The volatility is so violent that your broker's spreads will widen massively, causing severe slippage and potentially blowing your account even if you predicted the direction correctly. True professionals wait for the algorithmic dust to settle before entering the market.